Mozambican government wants to set price of essential foodstuffs

21 June 2006

Maputo, Mozambique, 21 June – The Mozambican government wants to set the price of essential foodstuffs in order to reduce price hikes felt during some periods of the year in the country’s markets, according to local press reports.

The issue will be the subject of a study, which is to be concluded within a month, and discussion and approval on a government level, but, according to Mozambican daily newspaper Notícias, the foods whose prices are expected to be set include rice, oil, eggs, chicken and wheat flour.

Another measure being studied, according to the paper, is the mandatory posting of prices of goods on retail outlet shelves.

The government is also expected to alter opening times for retail stores, mainly during festival periods, in order to make them more appropriate for consumers.

Penalties will also be set for shopkeepers who indiscriminately increase the prices of essential products.

In 2004, Mozambique’s inflation rate was 9.1 percent, but in 2005 it rose to 14 percent against a government forecast of 8 percent. (macauhub)

According to the IMF “the authorities’ commitment to financing the transfer of majority ownership of the Cahora Bassa dam (HCB) operating company through non-recourse financing that does not increase the government’s liabilities to commercial creditors is welcome.”

“Mozambique’s external debt levels will remain well below its indicative thresholds for debt distress in the foreseeable future,” the IMF said.

The payment of the HCB debt to Portugal, totalling around US$1 billion, is in exchange for control of the largest dam in Southern Africa to Mozambique, which will have an 85 percent share in the infrastructure.

The Fund also praised the authorities’ efforts “to create sufficient fiscal space for priority investments,” and that this, “will require enhanced revenue mobilization,” and a, “reinvigorated public sector reform program and governance strategy aimed at improving public service delivery and using additional donor assistance effectively.”

With this extension the total loan granted by the IMF to Mozambique increased to US$11.9 million under the terms of the country’s Growth and Poverty Reduction Strategy Paper (GPRSP).

“Mozambique’s strong macroeconomic performance continued in 2005 and early 2006, despite exogenous shocks. Fiscal results have been commendable and all performance criteria through end-March 2006 have been met. While the macroeconomic outlook remains favorable, vigilance will be required, in light of volatile oil prices and unpredictable weather,” the IMF report said. (macauhub)